Ivanka and Conservatives Want to Raid Social Security to Pay for Parental Leave

It's the conservative version of cradle-to-grave welfare.

Some conservative lawmakers, along with First Daughter Ivanka Trump, are contemplating a scheme to use Social Security funds to help new parents take paid time off from work. It's a clever idea that certainly avoids some of the problems with rival parental leave plans. Still, this is a flawed proposal that'll do more harm than good, including to its intended beneficiaries.

The plan is the conservative answer to the liberal lament that America is the only industrialized country that doesn't offer government-mandated paid parental leave—although many companies do so voluntarily. Authored by the Independent Women's Forum's Kristin Shapiro, the idea is simple and elegant: It would let working parents collect Social Security for up to 12 weeks after childbirth so long as they agree to postpone retirement benefits for an analogous time later.

A woman who enters the workforce at 21, Shapiro estimates, would earn an average of about $31,000 by the time she has her first child at the age of 26. Using the formula deployed to calculate Social Security disability benefits, Shapiro estimates that this would make her eligible for $1,175 a month for three months, or about 45 percent of her wages, roughly comparable to what other rich countries offer. On the back end, she would only have to forego retirement benefits for a matter of weeks to make the numbers work. Also, since Social Security disability payments are means-tested, poor and middle-class couples would get more relief than richer ones, targeting help to those who most need it.

At first blush, this seems like a win-win-win. Deferring retirement benefits for a few weeks doesn't involve great hardship to older people—whereas collecting early would potentially make a meaningful difference at the hardest times in the lives of young couples. Also, because couples are basically borrowing against their own future benefits, the program is self-funded and would require no new government spending or taxes. Likewise, employers would face no new expense either.

So what's not to like? Well, plenty.

For starters, just because employers don't have to fund the program doesn't mean there would be no cost to them. The scheme will incentivize more workers to take off and for longer periods of time. This will be especially disruptive for small businesses and start-ups that operate on a shoestring budget and can't spread the responsibilities of the absent workers across a large workforce. They will inevitably shy away from hiring young women of childbearing age. This will diminish these women's job options. And for what?

The sum total of the average benefit over three months works out to $3,525. With a little advance planning, many couples can save that amount in a couple years before having children, so long as they can both find work. But if one of them can't, the lost wages may add up to far more. In other words, many couples would have no net financial gain from this scheme, but could face a potential net loss.

Furthermore, it isn't like Social Security has a ton of spare cash lying around to dole out to people other than retirees. The program used to generate surpluses when its worker-to-retiree ratio was high. But this ratio has dropped from 42 workers to one retiree in 1945 to less than four workers per retiree now. And even though payroll taxes have gone up from 2 percent at the program's inception to 12.6 percent now, the system is still taking in less money than it is paying out in benefits, because of all the retiring baby boomers. In theory, past surpluses are covering the rising burden. But in fact, these surpluses were spent as they were collected, so there is no actual piggy bank full of cash to draw from. If Social Security funds are used to pay for parental leave, it would mean even less money to cover retirees. They would either face benefit cuts or would have to be paid either by drawing funds from other programs or by raising taxes on everyone else.

Shapiro and co. are also selling the program as a back-door way of creating personal savings accounts by giving individuals more control over their own funds, long a goal of conservative reformers. But the Mercatus Center's Veronique de Rugy notes that personal accounts are fully funded defined contribution plans that empower the individual and shift away from the highly underfunded defined benefit portion of Social Security. (The system's unfunded liabilities over 75 years exceed $8.6 trillion.) "The paid family leave idea moves in the opposite direction by adding further short-term financial stress on the system and expanding the government's involvement into a new benefit," points out de Rugy. Translation: more government spending and more debt.

It is also beyond naïve to think that once the government is allowed to dip into Social Security to pay for family leave at childbirth, it'll simply stop there. Why shouldn't families taking care of old and sick parents get a similar deal? Liberals are already floating proposals to use Social Security for student loan forgiveness. The possibilities are endless.

As with most technocratic solutions to complex problems, the family leave plan suffers from tunnel vision that causes it to ignore unintended consequences. It's a nice try. But conservatives pilloried President Obama when he used the life of the mythical Julia to push cradle-to-grave welfare policies. If they now rob the grave to pay for the cradle, they will inspire liberal schemes for other stages of life in-between.

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The entire concept of “parental leave” needs to be seriously questioned: children are a lifestyle choice, and as such don’t need to be addressed by government any more than a decision to buy sneakers instead of cowboy boots.

For this argument to make sense, it requires a never-ending (and logarithmically expanding) influx of fruitful third-worlders to prop up the previous batches as they presumably assimilate and stop having so many babies. At some point, the rest of the world isn’t going to fit (comfortably) inside the US.

Social Security has always been a population Ponzi Scheme, with today’s benefit payments to retirees depending on new contributions from the incoming labor force. There is no other way to describe it. At first there were few retirees eligible for payments, so the fund built up. It grew through the retirement of the WWII generation because the baby boomers were a large enough working population to keep it solvent (of course, LBJ recognized the benefits of this situation and convinced Congress to merge the Social Security trust fund with the general fund in order to help finance the Vietnam War. Social Security has been a stack of IOUs in a filing cabinet ever since.

I don’t think government should be in the business of adjusting labor contracts. But if the administration is bound and determined to go there, I would think that tax breaks for corporations offering paid family leave, while unpalatable, would be preferable to further draining Social Security.

I agree that government shouldn’t get between businesses and labor. But because I dislike government involvement in “picking winners,” either, I disagree with offering tax breaks for corporations with paid family leave.

The reason employers hire employees is, of course, to do work that satisfies their customers and generates profits. Employee choices to have children don’t make them better employees (maybe you have data that I don’t), and might actually make them worse (more work absences; fatigue; early departures, etc.). An employer might want to offer paid family leave to help retain good employees. But another employer might not: they might want to maintain an impartial disinterest in the lifestyle choices of their employees; the company owner might hold strong beliefs about overpopulation as some do about birth control; they might want to make benefits more equitable for single, gay, or childless employees.

Granting tax breaks to companies that pay out for kids says, “we think childrearing is a more desirable lifestyle choice.” It’s picking winners. Trouble is, the only arguments for childrearing being more desirable are (1) sentimental/religious, and (2) based on the government’s desire to grow itself, and for more revenue to prop up a massive Ponzi scheme of entitlements. So while it’s clever for the government to reward people for contributing to its own bloat, it’s not really something we need government to do.

Another fun fact: the percentage of Americans in the labor force peaked 18 years ago in January of 2000, and has been going almost steadily downward since. And we haven’t even gotten to the point where self-driving vehicles have eliminated human cab, truck, and Uber drivers yet.

Maybe the idea that we “need” an endlessly growing population isn’t true anymore.

There’s also the fun fact that people seem to be doing just fine choosing to pump out more babies without the “incentives” progs are screaming for; in fact, the poorer they are, the more babies they just sort of let drop indiscriminately. The combination of this, and the fact that robotics and automation stand to eliminate many low-skilled jobs, make any government schemes to “encourage” more babies pretty dumb.

1. We don’t need that many future workers if we eliminate the Ponzi scheme and stop making young people responsible for oldsters who should have been saving their money. 2. We don’t need that many future workers when low-skilled jobs are evaporating. 3. We don’t need to incentivize childbirth (even more than we already do) when people grunt out plenty of babies without it. 4. We do a shitty job of assessing the ROI for what we already pay out for breeding. We pay for kids’ education, for WIC, Section 8, welfare, food stamps, Medicaid…and in return, 18 years later, do we get productive adults? Or just more teen moms and special-autistic-sensitive snowflakes who need to lie on their couches all day playing video games?

Saving a few thousand dollars should be an achievable financial goal for prospective parents. Children are a massive responsibility

It should be, but realistically that’s not happening. The last time we had double-digit savings rates on anything resembling a consistent basis was the early 1980s, when the Silent Generation, who drove that savings rate, began hitting retirement age. Our economy is almost completely driven by consumer debt now (along with the ever-increasing costs of healthcare), and isn’t helped in any way by the odious message from our elites that saving money hurts the economy. Going back to a savings-friendly economy would require a wholesale cultural shift in mindset that our country just won’t be willing to take short of another Great Depression.

Going back to a savings-friendly economy would require a wholesale cultural shift in mindset that our country just won’t be willing to take short of another Great Depression.

Probably, but that still doesn’t make paying people to stay home and have babies a government responsibility. Arguably, we should expect people who choose to have kids to have a future-time orientation; to consider and plan for the future. If they can’t/won’t do this, doesn’t make their choice to breed my responsibility.

Arguably, we should expect people who choose to have kids to have a future-time orientation; to consider and plan for the future. If they can’t/won’t do this, doesn’t make their choice to breed my responsibility.

True. The problem is that we live in a society that will make it your responsibility, one way or another. We now have school districts feeding kids breakfast, lunch, and after-school snacks, irrespective of whether they actually qualify for it or not, because “no child should go hungry”. If we don’t expect families to feed their own kids, it’s not a large step towards using SS as a family leave fund (and maybe raising the SS tax rate to help pay for it will probably proposed as well, because the AARP contingent will swallow their dentures when they hear about this). Honestly, that this proposal was even floated shouldn’t surprise anyone.

The real problem was that from the beginning SS was made compulsory and the ONLY option available for working people to put money aside for retirement, the theory being that government was so much more able to figure out what to do with our money. We know how that worked out.

A “mixed” plan allowing workers either to contribute to SS (pre-tax) or direct that amount into a self-directed IRA would have made much more sense. Hence, it was never tried.

This is actually a much better idea. The people use their own savings, no additional load on Social Security–which needs to be dismantled anyway–and it would help offer an incentive for people to prepare to have kids.

One thing that is appealing about SS, I have to admit, is that I know it’ll always be there for me (well, it would if it would make it that long, which it won’t); it can’t be garnished. As I save up more and more money, I can’t help but feel like I’m painting a target on my back for some asshole to find a way to sue me for something. And I do fear that just a bit from time to time, like it’ll all be for nothing and I’ll be an old broke sucker. I damn well trust myself with my money more than the government, but I do sometimes feel it isn’t quite safe.

Oh, it will always “be there”, but we are on a trajectory where anyone with any income is going to find it gets means tested into the dust. Your 401k with it’s required minimum distributions is a weapon against you, and those workers who have a meager 800k or so in there when they retire are going to find themselves pissed off, as their retirement calculus gets pissed on once taxes get added in.

One of the reasons young people don’t max out their 401ks is that they need the money now, especially if they anticipate having a baby.

So, take that barrier off the table. Tell them that they should go ahead and max their 401k, because it’s just like saving up for a baby.

But in reality, babies often fail to show up when planned. So on average, people will put more into their 401k (even after accounting for the 3 months of 50% wages) than they otherwise would have.

Set a limit. With each baby born, you can withdraw $10k from your 401k tax and penalty free. This gives you the cash you need now, and it incents you to save more in your 401k than you otherwise would have.

I was able to pull out a loan against my 401k that I used to buy a car. I believe I could use up to 40% of the vested balance, it was repaid by additional paycheck withholdings, and I chose the repayment window.

i think 401ks are an excellent resource for young people, but they’re best if they’re mostly locked down. The temptation to dip into them is significant, and my generation will absolutely end up with underfunded retirements. For incidental savings I deposited a few percent into an account at another bank and chucked the debit card in a drawer.

I believe we will see more 401k/IRA flexibility as we go forward, but more discipline is required for each new way of depleting it.

Immigration affects the price of housing, because Progressive cities raise home prices by banning the construction of new homes. When each municipality puts a cap on how many families are allowed to live within it’s borders, immigrants do compete with newborn babies.

This is a ludicrous and clear attempt to ‘make’ something true that simply isn’t true. Does one only need a home if they have kids? Is having a home causal to having children? Obviously the answer is no to both questions, so linking them together is some fine sophistry but a poor argument.

Shit tons of people live in apartments and have children.

People can also move freely within the United States, so the housing price in San Francisco doesn’t mean jack shit for the birth rates in Arizona.

This a repeat of Medicare Part D. It is Bismarckian concession to the welfare state to forestall something worse proposed by the Left. It is unprincipled and makes little sense. I heard one conservative pundit while praising the proposal express that this would be a good way for younger people to get some of their SS contributions back before the system goes bankrupt.

It is appealing for young parents for sure. It just is morally bankrupt on many levels as a policy proposal. Like funding a specific peogram out if cigarette raxes when the supposed rarionale behind the taxes are to reduce or eliminate smoking. The supposed ideal revenue should be zero.

Funding a new entitlement from an existing one whose revenue stream cannot handle future benefits as it is, is equal madness.

How can it be morally bankrupt to get funds you’ve contributed back out of a system that you know for a fact won’t be there when you retire?

Is it moral to take from group A and give to group B when group A isn’t going to receive funds from group C to cover their entitlement? I’d say absolutely not, but your moral calculus appears to be ‘get while the getting’s good’ just for a different generation.

We can always fix the problem with immigration. Amend social security retirement policy so that people born between 1945 and 1965 must move to Mexico in order to collect social security retirement benefits. It is just more efficient to have all the old baby boomers live near the nurses and their families.

Eh. We need more children. It’s the basis of the whole economy, to constantly have more people.

You have subsidize them with a little bit of socialism, or import a bunch of latin americans and have them vote in a lot of socialism (see Venezuela)

Also, SS is pretty much a wealth transfer from the working poor to rich old people. Yes, not all of them are rich, but they tend to have more money than the people who are having their money taken. It should be means tested.

Eh, no, you actually don’t need more children, or at least, you don’t need to pay people to have them in any way. You can choose different economies, like one not dependent on a Ponzi scheme that robs future generations to pay for the profligacy of the past. And people will continue to have children, they’ll just whine about how haaaaard it is without someone needlessly subsidizing them for their choice. Like they always do.

I’m very sorry, but this parental leave notion is a eurosocialist thing. Yes, there are RINO’s on board. But more to the point: is Shikha a complete imbecile [who cant tell the difference between a conservative and a progressive/establishment republican], or is this a disinformation piece to conflate the two, thereby making conservatives blend into the background and muting their message? If it will help diffuse the disinformation component, Ted Cruz just set a turnout record in Texas this week for his primary… and the establishment hates him, with a capital H. I don’t mind a variety of viewpoints, but wilful stupidity [or whatever the author suffers from] is about as painful as watching the poseurs try to outplay each other for quick media buzz on Big Brother as they endure such bull and boredom that might have the unambitious immolate themselves on account of being imprisoned with the mentally ill with no relief in sight. This woman needs to be writing for the HuffPo, where it is expected for employees to remain on the wrong side of the looking glass. I miss Postrel… didn’t always agree, but points were made with some clear logic and a heart for truth.

It’s kinda shocking, but I’m mostly with Shikha’s reasoning here. Her labeling of this as a “conservative” proposal ignores that Ivanka is a Democrat and Rubio is mostly alone in pushing for this. I’m also curious about the subtext of why she opposes this. A birthing subsidy would create a boom in native births (especially since all the welfare for mothers and children aren’t likely to go anywhere.) Is it possible she opposes this on the grounds that an increased native birthrate would undercut the need/desire for immigrants of all sorts? I might be reaching here, but almost all of Shikha’s articles revolve around the belief that we should accept unrestricted immigration.

It is not possible for a government to transfer and redistribute prosperity for any purpose without at the same time transferring and redistributing an amount of poverty that is even greater than the amount of prosperity that is being transferred.

(If you prefer and think it makes more sense to you, substitute ‘money’ for ‘prosperity’ and substitute ‘cost’ for ‘poverty’ in the above sentence.) Governments ARE poverty generating and sustaining “dynamos”. Perhaps governments could be thought of as being negative output perpetual motion machines? The more that governments do, the greater the apparent need for government intervention will become. It is simply decreed by the basic laws of nature which shape and control the universe that we live in.

Whoever is in office or close to an office holder such as Ivanka, will work to screw up the already screwed up policies. Until office holders are subject to the laws they pass for us I determine them all to be treasonous bastards. Meanwhile, watch the yield curve!